A key component of the success of Part D is the negotiation and competition that occurs, helping to keep costs low for beneficiaries and taxpayers.

The way the program works is Part D purchasers negotiate discounts and rebates with prescription drug manufacturers. Because these large, powerful purchasers represent as many as 60 to 120 million covered lives, they have significant leverage to negotiate large discounts and rebates with manufactures on behalf of Part D plans. These savings are used to help reduce premiums, deductibles and cost sharing for Part D beneficiaries.

The latest Medicare Trustees report shows that this negotiation continues to work. It found that Part D manufacturer rebates are substantial, increasing every year of the program. What’s more, projected rebates are expected to continue to increase in the years to come.

Not only do competition and negotiation play an important role in Part D, but they also work effectively to keep costs low. Why change something that isn’t broken?

Nicole Longo Nicole is director of public affairs at PhRMA focusing on Medicare, 340B, importation and more. She previously worked for a D.C.-based public affairs firm where she assisted a wide range of clients with communications efforts on everything from trade policy to agriculture policy to health care policy. Outside the office, Nicole can be found trying new restaurants (usually Italian), taking an occasional barre class and cheering on the Cincinnati Bengals.